Carl Icahn Files $50B Apple Share Buyback Proposal

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Today Time reported that activist investor Carl Icahn filed a shareholder proposal that could press Apple to increase its share buyback program. The proposal, even if it is accepted by a majority of shareholders, would not force the company’s management to take any specific action.

Still, if it passed, pressure would be strong on Apple’s leaders to increase its shareholder reward programs. In response to Time’s piece, Apple confirmed that the proposal was filed and mentioned its recently increased its “capital return program.”

Icahn tweeted that he is indeed looking for an “increase” in the size of the buyback program. He did note that it will not be the $150 billion level that was discussed earlier this year. According to CNBC, Icahn wants what appears to be an additional $50 billion in repurchases.

Apple is returning mountains of cash to its investors, though those sums must be kept in proportion to its profits, and total cash position. As I reported previously:

In April Apple announced that it would boost its share repurchase program from $10 billion to $60 billion, as part of a $100 billion effort, executed with cash, set to conclude by the end of calendar 2015. That represented a $55 billion increase on its formerly announced shareholder return efforts.

In Apple’s estimation, it would return about $30 billion yearly to shareholders over the course of the expanded program, calculating that rate with a starting point of August 2012. Apple has issued a dividend for just over a year, at current date. The company now returns over $10 billion to investors yearly in the form of dividends.

If Apple increases the amount of its shares that it purchases, its earnings become more concentrated on a per-share basis, increasing the value of each unit of the company. The price of the shares then presumably rises, making Icahn a richer investor. If Apple does agree to expand its share repurchase program, it could increase pressure on other cash-rich technology companies to do the same. Google, Microsoft, and others are likely watching this situation closely.

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CrunchBase

BioCarl Icahn is best known as an activist investor. He buys large stakes in companies in an attempt to gain seats on the board of directors and increase shareholder value.
Some of his more recent moves involved Yahoo, Take-Two Interactive, Motorola, Blockbuster and Time Warner.